Paper Producer to Stop Clearing of Indonesian Forests

JAKARTA — Asia Pulp and Paper, one of the largest pulp and paper producers in the world, said on Tuesday that it had stopped clearing natural forests across its supply chains in Indonesia, accelerating an earlier commitment to do so by 2015.

The announcement comes as companies that rely on forests face increasing pressure from buyers to improve their environmental standards while financing aggressive demand-driven expansions. It also is just months before a two-year moratorium on new forest concessions mandated by the Indonesian government ends in May.

Environmental advisers say the about-face by a company with a history of poor corporate and environmental management could have wider implications for Indonesia’s main exporting industries, palm oil and mining.

“If A.P.P. can do this, there is no reason why any company anywhere in the world can’t do this,” said Scott Poynton, the executive director of the Forest Trust, a nonprofit forest management organization that is working with Asia Pulp and Paper, also known as A.P.P., to see that it implements its commitments. “Hopefully the government of Indonesia will look to bring in regulations to force companies in Indonesia to follow A.P.P.’s lead.”

A.P.P. is the largest pulp and paper company in Indonesia and a subsidiary of the Sinar Mas Group, which owns stakes in property and palm oil. It is also the third-largest pulp and paper company in the world, behind International Paper in the United States and Stora Enso of Finland.

Forest campaigners said A.P.P.’s new policy, started at the beginning of the month and under which it will use pulp only from trees grown on plantations, was a step toward reversing past actions. They also said the breakthrough for efforts to conserve Indonesia’s remaining natural forests was a sign that public pressure was having an effect.

“They’re starting to realize that if they want to be a key player in the international market, there is no point for them to continue with deforestation and peatland destruction,” said Bustar Maitar, the head of Greenpeace’s forest campaign in Indonesia.

Environmental activists welcomed the decision but said the company had failed to live up to similar promises in the past, citing at least three unmet commitments to stop the clearing of forests in the past decade. Many are also concerned with how A.P.P. has handled dozens of land disputes within its concessions.

“These are things they need to get a grip on if they want to be a truly sustainable player,” said Aditya Bayunanda, a pulp and paper manager at WWF-Indonesia, a conservation group.

The company’s fortunes depend on whether it can convince buyers and investors that it has changed its practices.

In 2001 A.P.P. defaulted on $13.9 billion in debt, drawing attention to deficiencies in its corporate governance. As part of debt restructuring agreements, the company agreed to ensure that its production facilities “meet certain standards,” the company said.

Company executives say A.P.P. has been trying to burnish its environmental credentials against an onslaught of criticism from environmental activists. They hope its new commitments will help with expansion plans and push others in the right direction.

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“We aspire to be a global leader in the pulp and paper industry, and to be a real leader we need to set a new benchmark for other players to follow,” Aida Greenbury, the managing director of sustainability at A.P.P., said earlier this week.

For years, groups like Greenpeace and the Rainforest Action Network have focused on A.P.P. with campaigns that accuse the company of fueling climate change and pushing rare Sumatran tigers, orangutans and elephants toward extinction by clearing the forests where they live.

In 2011, Greenpeace employed Barbie dolls to accuse the toy maker Mattel of using packaging that contained rainforest fiber. Under similar pressure, the KFC fast-food chain broke ties with Asia Pulp and Paper last July after Greenpeace protesters dressed as forest animals rallied outside stores in Europe. More than 100 companies, including the office supply store Staples, have also severed contracts with A.P.P. because of concerns that it continued to log natural forests.

Indonesia has some of the world’s largest and most biologically diverse rainforests. It has also suffered widespread deforestation. Half of the trees on the heavily forested island of Sumatra have been cleared in the last 30 years, according to Eyes on the Forest, a group of environmental organizations in Indonesia. The group says palm oil and pulp and paper are the biggest causes of forest loss.

Sumatra is also where most of A.P.P.’s 2.6 million hectares, or 6.4 million acres, are situated.

Greenpeace estimates that the company has already logged about one million hectares of natural forest in Sumatra. The Forest Trust says that only 150,000 to 200,000 hectares of natural forest will be set aside as a result of the new policy.

The company produces 18 million tons of pulp annually for export to more than 120 countries, many of them in Asia. To meet growing demand, it is discussing development of a new mill that would produce an additional two million tons of pulp each year.

Ms. Greenbury said the extra output had already been figured into the company’s new policy, but environmental activists are skeptical. They say the company has failed to meet the needs of its mills in the past, which is why it has turned to cutting natural forest.

The more environmentally friendly approach is for a company to reseed on its concession, yielding wood from replanted trees, or “plantation wood.”

In addition to suspending forest clearance, A.P.P.’s latest announcement also commits it to protecting peatlands and high-conservation-value forest, defined by the Forest Stewardship Council, a global forest management organization, as areas that are crucial to the surrounding ecosystem.

Furthermore, the company promised to develop strict guidelines for dealing with social conflicts within its concessions, and said it would recognize indigenous communities’ land-ownership claims.

The commitments were first outlined in June, when A.P.P. released its sustainability road map. The adoption of it this year was a sign it was ready for a radical move, said Ms. Greenbury, who denied that the pressure was coming only from buyers in America and Europe.

“The market in the West is not the only one driving this,” she said. “Everyone is.”

Correction: February 5, 2013

An earlier version of this article misstated the corporate affiliation of the palm oil producer Golden Agri-Resources. It is a subsidiary of Sinar Mas Group, which is also the parent company of Asia Pulp and Paper; it is not an arm of Asia Pulp and Paper.